Significant Move by Volvo: Parts Ways with EV Manufacturer Polestar

Written by Henrik Rothen

Feb.02 - 2024 7:38 PM CET

Photo: Alasdair Jones / Shutterstock.com
Photo: Alasdair Jones / Shutterstock.com
Volvo Parts Ways with EV Manufacturer Polestar.

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Volvo Cars has decided to end its collaboration with the Swedish electric vehicle manufacturer Polestar, opting to sell all its shares in the company to Geely. This move comes as Polestar faces financial turbulence, highlighted by the Swedish bank SEB's recent devaluation of Polestar from 18 billion Swedish kronor ($1.7 Billion) to zero.

The announcement of Volvo's complete withdrawal from its partnership with Polestar has notably pleased Volvo's shareholders, resulting in a surge in Volvo's stock price. From 27.5 kronor ($2.62), the price of Volvo shares jumped to 36 kronor ($3.43), marking an approximate 30 percent increase.

This rise is attributed to Polestar's financial struggles, which have negatively impacted Volvo. Moving forward, Geely, the Chinese owner of both Volvo and Polestar, will assume financial responsibility for Polestar.

Polestar's challenges don't stop there. The company's stock took a hit following the news, as reported by Svenska Dagbladet, and it faces further economic hurdles ahead.

Polestar is now navigating a critical period. With two new vehicles in the pipeline, the company will require substantial financial investment for software updates and bug fixes, given the high cost of its cars compared to competitors. The future success of Polestar hinges on whether it can secure the necessary funds to overcome these challenges.

Additionally, Polestar, like other electric vehicle manufacturers, is contending with intense competition from more affordable Chinese electric cars.

The European Union is currently investigating whether these manufacturers receive substantial state aid, warranting additional tariffs on Chinese electric vehicles.

Until any actions are taken, European carmakers, including Polestar, will continue to face stiff competition from China.

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